A Company Paid $500,000 for 12% Bonds with a Par

question 103

Essay

A company paid $500,000 for 12% bonds with a par value of $500,000.The bonds pay 6% interest semiannually on September 1 and March 1.The company intends to hold the bonds until they mature.Prepare the journal entries for the following dates and transactions related to this bond acquisition.
(1)Bonds purchased on September 1,2009.
(2)Year-end adjusting entry,December 31,2009.
(3)Receipt of semiannual interest March 1,2010.
(4)Redemption of the bonds at maturity on August 31,2016.

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Definitions:

Deliverable State

A condition or state in which a project, product, or service has met all its requirements and specifications and is ready to be delivered to the client or customer.

Title

The legal right to own, use, or dispose of property, or a formal designation for a book, composition, or other artistic work.

Title

A legal term referring to a person's legal rights to own, use, and dispose of property or assets; also, the document or deed proving such rights.

Agreement

A mutual understanding or contract between parties outlining the terms and conditions of a relationship or deal.